By David J. Herzig

In what I’m dubbing follow-up Friday, I wanted to give a quick update to two stories I am following regarding tax avoidance structuring.  One on the corporate side: the French Tax Authority Raids on Multinationals; and, one on the individual side: the Messi Tax Fraud Trial. Both stories are heating up.

French Tax Raids

It was reported overnight that McDonald’s French headquarters was raided by French taxing authorities.  Unlike the Google raid that was reported in real time, this raid appeared to take place on May 18.

Much like the Google raid this investigation is centered on tax avoidance.  McDonald’s problems seem to have started in December when a lawsuit was brought against the company for understating earnings.  Apparently, in France, workers are entitled to a share of profits. A February 2015 report stated that McDonald’s avoided almost 1 billion euros of taxes using its Luxembourg subsidiary.

I guess Diane Ring was correct in her comment that all multinationals should be preparing for tax raids in France.  If you don’t have a plan in place, you should be working on one now.  Finally, Professor Byrnes at Texas A&M wrote an interesting story on his blog about routes for the United States to increase its involvement.

Messi Tax Fraud Trial

The most trustworthy news outlet, World Soccer Talk, is reporting that Lionel Messi will testify on June 2 for in his tax fraud trial.  As I previously reported, the trial is due to start on May 31.

A fascinating wrinkle that the article points out is that although there is potential jail time (22 months) if Messi is convicted of tax fraud, often that sentence is suspended.  “However, any such sentence would likely be suspended as is common in Spain for first offences carrying a sentence of less than two years.”

As I keep looking into sports figures tax avoidance planning, more and more amazing items come to light.  In January, Kelly Phillips Erb, reported in Forbes about another FC Barcelona player, Javier Mascherano, pled guilty to not paying tax for 2011 and 2012.  How fun would it be if two players of the NY Yankees were convicted of tax fraud.

These stories are why I love Europe!